Chennai-based global pharma major Orchid Chemicals & Pharmaceuticals Ltd has sold its penicillin and penem API business, including a unit at Aurangabad and the R&D infrastructure in Chennai, for $200 million.

As per the agreement, “Orchid will transfer related penicillin and penem product portfolio and around 830 employees to Hospira. The firm will supply penicillin and non-penem non-cephalosporin (NPNC) to Orchid as per its requirement. Orchid would also continue to supply its cephalosporin APIs to Hospira in accordance with the long-term supply contract.”

This acquisition demonstrates Orchid’s ability to build value in its chosen product domains and successfully monetise those to create value for the stakeholders. The deal will also help it deleverage its debt position and fund new growth plans.

Latham & Watkins LLP acted as the international legal advisor and Amarchand Mangaldas & Co. acted as the Indian legal advisor to Orchid.

Established in 1992 as an export-oriented unit, Orchid Pharma today ranks among the top 15 pharmaceutical companies in India and has a multi-therapeutic presence across segments like anti-infective, anti-inflammatory, central nervous system (CNS), cardio vascular segment (CVS), nutraceuticals and other oral and sterile products. It has presence in more than 70 countries through alliances, joint ventures and partnerships with globally reputed majors.

“With investments across the pharma value chain ranging from research to API & FDF manufacturing, we have harnessed key product opportunities and built a strong revenue base. Moving on, we would like to replicate this success by creating more niche product and therapeutic verticals which will continue to power our growth. This business transfer agreement with Hospira will help us fast-track our future growth while maintaining a healthy debt profile in our balance sheet. Given the current scenario, it is a prudent decision for Orchid to monetise these verticals and bring in cash to deleverage its debt position and fund newer growth horizons,” said K Raghavendra Rao, chairman & managing director.